Americans who are able to buy homes are putting down payments of more than 12% on average, a survey from mortgage lead generator LendingTree LLC found this month.
But the findings have not reassured mortgage industry members — including LendingTree chief executive Doug Lebda — who are worried about regulatory efforts to raise the minimum amount home buyers must put down upfront.
"I don't like the entire concept at all … [it] would be a significant exclusion of people out of the market," Lebda told American Banker in an interview.
LendingTree's findings come as downpayment requirements have become a highly controversial issue in the mortgage industry. Policymakers are entertaining several proposals that would raise the minimum downpayment for loans backed by Fannie Mae and Freddie Mac. Those minimums are typically 5% currently but can be as low as 3% in some cases.
The industry has voiced vigorous objections to a regulatory proposal (mandated by the Dodd-Frank Act) that would require "qualified residential mortgage" borrowers to pay a 20% downpayment in order for the loans to be exempt from risk retention.
Many in the industry are advocating for a 5% downpayment requirement, while some regulators have suggested 10% would be a safer number. LendingTree's data indicates that consumers — or at least those who can afford to buy a home in the current economy — are already paying more than 10% on average in downpayments. And buyers in some states are paying even more than 12% in downpayments on average, especially in states where property is usually more expensive, the survey found.
But Lebda still supports a lower downpayment requirement.
"You're dealing here in averages. In this data some borrowers have put 40% down and some have put 5% down," he says. "I'm for the 5%."
New Jersey leads the country with the highest average down payments at 13.8%, according to data released by the Charlotte, N.C., company earlier this month. Buyers in Washington, D.C. and New York put down payments of 13.5% of the total property value, those in Hawaii pay 13.4% and those in California pay 13.6%, LendingTree found.
The lowest average down payments are made by home buyers in Wyoming, Oklahoma, Utah and Tennessee, who put down between 11.4% and 11.7% of the amount.
